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Bullish on the Growth Prospects for Apple

A recent issue of The Value Line Investment Survey® was dominated by technology-related stocks, including powerhouse Apple Inc. (Nasdaq: AAPL). The California-headquartered company is one of the world's largest makers of consumer electronics, such as the iPod digital music player, the iPad tablet, and the iPhone smartphone. It's one of the largest corporations trading on the U.S. exchanges, with a market capitalization that is around $1 trillion. Apple joined the Dow Jones Industrial Average in March of 2015.

“Apple has posted solid numbers despite sluggish results from its mature smartphone franchise. The company has been making progress in its non-iPhone businesses, particularly in its services and wearables segments. Investors have viewed the performance positively and bid AAPL's stock price up, further helped by a positive guidance revision. Management expects fourth-quarter revenues to be between $61 billion to $64 billion. Notably, iPhone trends are stabilizing, including in China.

Looking ahead, the just-announced next-generation models, the iPhone 11, 11 Pro, and 11 Pro Max, which offer an improved camera system and will be offered at attractive price points, ought to be a growth driver,” notes Richard Gallagher, Associate Director, Value Line Research.

“Apple has some other interesting growth avenues. The company's new streaming platform Apple TV+ will probably make a splash thanks to its sizable customer base and an attractive price point. This should help it compete with established players like Netflix and Hulu. All told, it appears Apple is well positioned for the years ahead,” says analyst Gallagher.

“All in all, we remain bullish on the growth prospects here, and we see share earnings rebounding sharply, to $13.60, in fiscal 2020. “While Apple's improved business prospects have certainly not gone unnoticed by the investment community, we think that the issue still offers decent risk-adjusted returns to the 2022-2024 time frame. Thus, we continue to like this good-quality Dow component for long-term investors. There may be some volatility here, however, with the ongoing trade dispute between the U.S. and China being the major headline risk, say the analyst.

Editor’s Note: The Value Line Investment Survey, 551 Fifth Ave., Fl. 3, New York, NY 10176, is available in print and digital formats. For rates on their newsletters visit www.ValueLine.com.

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